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France, Germany, and Sweden link taxes to passenger vehicles' carbon dioxide (CO2) emissions rates. Based on new vehicle registration data from 2005 to 2010, we find that CO2 taxes reduce registrations. The effect is larger in France than in either Germany or Sweden, and the French results are robust to alternative estimation models. Compared with those of France, the German results vary somewhat more, and the Swedish estimates are the least robust. We find some evidence that the French tax affected the mix of new vehicles that vehicle manufacturers offered in the French market. (JEL H23, L62, Q54, Q58)

The Philippines pioneered the establishment of automotive assembly in South-east Asia in the 1950s. But Thailand, Indonesia and Malaysia lead the region since the 1990s. The foremost reasons for the decline are policy incoherence and unchecked inflows of smuggled cars, which are reflected in the erosion of the domestic automotive components supply base. Japanese assemblers are increasingly sourcing them from abroad through global production networks (GPNs), which have also made the Philippines a global producer of selected auto parts. Institutional support is necessary for the Philippines to take advantage of GPNs to catching up with the leading countries.

This article examines the development of China's automotive industry. The evidence shows that integration in global production networks has stimulated upgrading of technological capabilities among automotive firms. However, the competitiveness and intra-industry analyses show mixed results. Although intra-industry trade in automotive products has improved since 2000, the trade competitiveness of completely built-up vehicles has largely remained in low value-added activities. Nevertheless, firm-level evidence shows that the industry has undergone considerable upgrading, albeit in low value-added activities. Trade integration and host-country institutional support have been the prime driving forces of technological upgrading in the automotive industry in China.

This article examines the transformation of clothing manufacturing in China with a focus on institutional support, technological upgrading and global production chains. Evidence shows that reforms and integration into global production chains have rapidly expanded China's exports but these have also driven the relocation abroad of Chinese clothing firms. Global integration has motivated clothing firms to upgrade through learning, adoption and innovation. Hence, despite improvements in technological capabilities the share of clothing value-added in manufacturing has gradually declined. Also, China has increasingly faced industrial structural change from clothing to the capital goods, real estate and high-tech sectors.

This study analyses the influence of host-site institutional support, foreign ownership and regional production linkages on firm-level technological capabilities using data from automotive firms in Indonesia. The results show that host-site institutional support and foreign ownership are positively correlated with technological capabilities. In addition, regional linkages show a significant and positive link on technological capabilities. However, regional linkages and foreign ownership explain more strongly technological capabilities than host-site institutional support in automotive firms in Indonesia. This evidence suggests that the supporting high tech environment require further strengthening to stimulate higher technological capabilities in the automotive industry in Indonesia.

It is often asserted that consumers undervalue future gasoline costs relative to purchase prices when they choose between automobiles, or equivalently that they have high "implied discount rates" for these future energy costs. We show how this can be tested by measuring whether relative prices of vehicles with different fuel economy ratings fully adjust to time series variation in gasoline price forecasts. We then test the model using a detailed dataset based on 86 million transactions at auto dealerships and wholesale auctions between 1999 and 2008. Over our base sample, vehicle prices move as if consumers are indifferent between one dollar in discounted future gas costs and only 76 cents in vehicle purchase price. We document how endogenous market shares and utilization, measurement error, and different gasoline price forecasts can affect the results, and we show how to address these issues empirically. We also provide unique empirical evidence of sticky information: vehicle markets respond to changes in gasoline prices with up to a six month delay.

There is recent evidence that consumers’beliefs about product attributes in some settings are systematically biased away from their true values. This question is especially important in the automobile industry, where some analysts have argued for fuel economy standards and information disclosure because consumers systematically misperceive the …nancial value of fuel economy. This analysis exploits new data from the Vehicle Ownership and Alternatives Survey, a nationally-representative 2100-person dataset that elicits beliefs over the …nancial bene…ts and costs of owning higher- and lower-fuel economy vehicles. The data suggest that consumers correctly estimate or slightly underestimate the value of fuel economy. Also, there is robust empirical evidence of the "MPG Illusion" consistent with Larrick and Soll (2008): consumers intuitively perceive that fuel costs scale linearly in miles per gallon (MPG) instead of gallons per

We investigate whether car buyers are myopic about future fuel costs. We estimate the effect of gasoline prices on short-run equilibrium prices of cars of different fuel economies. We then compare the implied changes in willingness-to-pay to the associated changes in expected future gasoline costs for cars of different fuel economies in order to calculate implicit discount rates. Using different assumptions about annual mileage, survival rates, and demand elasticities, we calculate a range of implicit discount rates similar to the range of interest rates paid by car buyers who borrow. We interpret this as showing little evidence of consumer myopia. (JEL D12, H25, L11, L62, L71, L81)

We investigate how the general principles of the Treaty have been applied to the car sector in the EU, given the specific soft law provisions which are typical of the sector. A detailed quantitative analysis from 1990 to 2008 highlights a reduction of aid over time. A shift from sectoral to Òregional developmentÓ motives in granting aid to the sector is also observed in the last ten years. However, sector specific aid is now less explicit but it remains important. Large amounts of public money are spent without a consistent strategy, reducing capacity in some cases, expanding it in others. The scarcity of public funds calls for a more focussed European policy for this industry.

This paper analyzes market share changes in automobile and light truck submarkets. We find that new product, as measured by restyling, represents the most consistent, dominant determinant of demand. On average a 10% reduction in relative price would yield only one-tenth the market share impact of a restyling. Alternatively, one would have to double one's relative advertising expenditures to match the impact of a restyling. Several demand determinants not previously modeled, including rebranding and warranty curtailments, were detrimental to domestic manufacturer market shares. Safety appliance adoptions and changes in vehicle reliability had minimal impact on demand.

During the summer of 2005, the three domestic U.S. automobile manufacturers offered a customer promotion that allowed customers to buy new cars using discount programs formerly offered only to employees. The initial months of the promotion were record sales months for each of the three firms, suggesting that customers thought that the prices offered during the promotion were particularly attractive. In reality, however, many customers paid higher prices under the employee discount pricing promotion. We propose that the promotion changed customers' beliefs about current versus future prices, convincing them to purchase during the promotion rather than delay in anticipation of future discounts. We investigate several alternative explanations for the simultaneous increase in prices and sales, including advertising, decreased financing costs, industry trends, disutility of bargaining, consumer differences, and changes in trade-in values. None of these explanations fully explains the concomitant increase in prices and sales.

Over the last two decades an unprecedented increase in private vehicle ownership has taken place in the developing world. This growth is due, in part, to increased international trade in used vehicles. In this paper we use theory and empirical evidence to evaluate the environmental implications of free trade in vehicles and other used durable goods. With non‐homothetic preferences, used vehicles are relatively inexpensive in high‐income countries and free trade causes these goods to be exported to low‐income countries. We apply this framework to the North American Free Trade Agreement. Since trade restrictions were eliminated in 2005, over 2.5 million used cars have been exported from the United States to Mexico. Using a unique, vehicle‐level dataset, we find that traded vehicles are dirtier than the stock of vehicles in the United States and cleaner than the stock in Mexico, so trade leads average vehicle emissions to decrease in both countries. Total greenhouse gas emissions increase, primarily because trade gives new life to vehicles that otherwise would have been scrapped. Key Words: Durable Goods, Non‐Homothetic Preferences, NAFTA, Climate Change JEL: F18, H23, Q54, Q56.

Even before the bailouts of GM and Chrysler in 2009, several governments in Canada have shown an increased willingness to subsidize private investment projects, especially in the manufacturing sector, to the dismay of tax conservatives. I evaluate under what circumstances these government subsidies make sense, paying particular attention to the efforts of the Ontario and federal governments to attract new investments in the automobile sector. I show what governments should expect to pay when they join a bidding war and derive the expected welfare gain. The analysis suggests that, in contrast with the public debate and many previous studies, it is not the absolute size of benefits that matters, but the relative private attractiveness for the investing firm and the relative size of externalities in each location.

In this paper, the profitability of German car manufacturing firms is related to different indicators for the knowledge incorporated in the firms since the birth of the industry in 1886. The analysis is performed with an ordered probit model, where information about the mode of exit of the firms is exploited to construct a latent variable for profitability. Knowledge is represented by the number of patents, learning-by-doing and entrepreneurial experience before entry. The results show that knowledge is significantly positively related to firm profitability and that each of the three knowledge forms exerts an independent effect.

This paper examines complementarity among vertical integration decisions in automobile product development. Though most research assumes that contracting choices are independent of each other, contracting complementarity arises when the returns to a single vertical integration decision are increasing in the level of vertical integration associated with other contracting choices. First, effective coordination may depend on the level of (noncontractible) effort on the part of each agent; contracting complementarity results if coordination efforts are interdependent and vertical integration facilitates a higher level of noncontractible effort. Second, effective coordination may require the disclosure of proprietary trade secrets, and the potential for expropriation by external suppliers may induce complementarity among vertical integration choices. We provide evidence for complementarity in product development contracting by taking advantage of a detailed data set that includes the level of vertical integration and the contracting environment for individual automobile systems in the luxury automobile segment. Using an instrumental variables framework that distinguishes complementarity from unobserved firm-level factors, the evidence is consistent with the hypothesis that contracting complementarity is an important driver of vertical integration choices. The findings suggest that contracting complementarity may be particularly important when coordination is important to achieve but difficult to monitor.

The paper investigates how pre-entry experience, post-entry experience and innovative activity affected the survival of German automobile firms over the period 1886-1936. A statistical survival analysis is performed which links instrumental variable estimation with the Cox regression. The main results are that all three knowledge components exert an independent and significantly positive effect on firm survival. Moreover, innovative activity is able to compensate for post-entry experience, in accord with Schumpeterian creative destruction. The industry life cycle describes how the number of firms in an industry evolves from birth to maturity. This evolution is driven by entry and exit dynamics and hence by the success and failure of firms. Analysing this dynamic pattern raises the question of why entry, so prominent in early phases of the industry life cycle, ceases at some point in time, and seeks an identification of the forces driving firm exit. In theoretical models of industry evolution such as Klepper (1996, 2002a), knowledge (in different forms) is considered the main driving force shaping the life cycle pattern. These models distinguish three components of knowledge: (i) knowledge acquired before entry (pre-entry experience), (ii) knowledge acquired after entry (post-entry experience) and (iii) knowledge acquired in the course of innovative activity (innovative experience). Empirical analyses of the life-cycle pattern focus entirely on the investigation of the exit dynamics. Statistical methods for survival analysis are used to relate the knowledge components to the exit risk of firms in terms of the hazard rate (defined as the probability of exit, given that the firm has survived so far). The most appropriate way to implement this kind of empirical analysis is to study single narrowly defined industries. With respect to pre- and post-entry experience, this has been done by Buenstorf (2005), Buenstorf and Klepper (2005), Klepper (2002a), Klepper and Simons (2005) and Thompson (2005) for various industries. The automobile industry has been studied by Boschma and Wenting (2007), Cantner et ai (2006) and Klepper (2002a, b, 2007) for the British, German, and US cases, respectively. Within the same framework, innovative experience has been investigated by Klepper and Simons (2005). A major advantage of these studies is that they track a single industry's entire life cycle from birth to maturity. In contrast, other duration analyses in industrial economics focus on firms sampled together, irrespective of the industry of origin, over rather short time spans. The works of Audretsch and Mahmood (1993, 1994, 1995) are exemplary in this respect. In this paper we investigate the role of knowledge in the life cycle of the German automobile industry during the period 1886-1939. A comprehensive data-set of German automobile producing firms has been assembled for this purpose. This data-set records the entry and exit dates of the firms, their experience before they entered the market and their innovative activity in terms of patent grants. The econometric analysis of the patent data is faced with a potential simultaneity problem, which we approach with a combination of (£) The London School of Economics and Political Science 2008

Exploiting a rich data set of passenger vehicle registrations in twenty U.S. metropolitan statistical areas from 1997 to 2005, we examine the effects of gasoline prices on the automotive fleet's composition. We find that high gasoline prices affect fleet fuel economy through two channels: (1) shifting new auto purchases towards more fuel-efficient vehicles, and (2) speeding the scrappage of older, less fuel-efficient used vehicles. Policy simulations based on our econometric estimates suggest that a 10% increase in gasoline prices from 2005 levels will generate a 0.22% increase in fleet fuel economy in the short run and a 2.04% increase in the long run.

We specify and estimate a dynamic game to study the equilibrium relationship between market structure and innovation in the automobile industry. The quality of each firm’s product for the average consumer, the key state variable, is modeled as stochastically increasing in innovation,the dynamic control, which is proxied by patent applications. Equilibrium innovation is a function of market structure, the vector of quality levels of all active firms, and the cost of R&D. Our main findings are as follows:(a) optimal innovation has an inverted-U shape in own quality; (b) holding own quality constant, innovation is declining in average rival quality but increasing in quality dispersion; and (c) following entry, each incumbent’s innovation declines, but aggregate innovation increases in most market structures. These findings are broadly consistent with the Schumpeterian hypothesis that market power leads to more innovation. ispartof: Review of Economics and Statistics vol:98 issue:1 pages:192-208 status: published

We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the “price grid,” or the possible amounts that bidders can bid above the current standing price. Using two diverse auction sites, one in New York and one in Texas, we find that buyer and seller behavior differs strikingly across the two sites. Specifically, in Texas we find peculiar patterns of bidding among a small but prominent group of buyers suggesting that they are “cyber-shills” working on behalf of sellers. These patterns do not appear in the New York auctions. (JEL C93, D12, D44, L62, L81)

This article examines how global production networks have benefited technological upgrading in the semiconductor industry in China. The evidence shows that trade has impacted positively on technological capabilities. The empirical evidence show that 93 percent of firms were engaged in incremental innovation activities, while 87 percent in new product development in 2012. The mean R&D intensity was 6.3 percent. State-owned enterprises showed the lowest mean of 5.3 percent. The mean share of R&D personnel in workforce was 28.2 percent. Government support (90 percent) and collaboration with universities and research institutes (87 percent) has been pertinent in firms’ participation in R&D activities.

Using patent data on 355 applicants patenting to the European patent offices from 1998 to 2010 on environmental road transport technologies, we investigate under what conditions the European environmental transport policy portfolio and the intrinsic characteristics of assignees’ knowledge boost worldwide green patent production. Our findings suggest that post-tax fuel prices, environmental vehicle taxes, CO2 standards and European emission standards, introduced in the empirical model through an innovative methodology based on Self-Organising Maps (SOM) (Kohonen, 1990; 2001), positively influence the creation of environmental inventions. Most importantly, we advocate that assignees anticipate the introduction of those emission standards, filing patents before the effective implementation of regulations when legislations are announced. Furthermore, we provide evidence that in a technological space (which measures the applicants’ technological proximity), closely located organisations enhance their patent output through the exploitation of technological knowledge produced by others. This means that the greater the proximity between assignees, the higher their likelihood of taking advantage of the knowledge produced by others. Finally, we observe that dynamic changes (both in quantity and in the number of technological fields engaged) in assignees’ patent portfolios spur inventive performances.

The aim of this paper is to propose an alternative approach for outlining policy responses to stimulate the automotive industry. The scientific community has developed and employed the Delphi method to collect and convey perspectives and impressions, and also define a number of financially viable proposals. The panel of experts takes the view that traditional industrial policy measures denote limited effects to stimulate car demand, in a context of a macro-economic downturn. By contrast, the panel also believe incentives for car demand are important for environmental purposes, for safety and for the diversification of energy sources. The policy measures proposed are fundamental from the viewpoint of overturning path dependencies in the automotive industry which impede the diffusion of alternative vehicles, with respect to business models and consumer attitudes.

The rescue of the US automobile industry amid the 2008–2009 recession and financial crisis was a consequential, controversial, and difficult decision made at a fraught moment for the US economy. Both of us were involved in the decision process at the time, but since have moved back to academia. More than five years have passed since the bailout began, and it is timely to look back at this unusual episode of economic policymaking to consider what we got right, what we got wrong, and why. In this article, we describe the events that brought two of the largest industrial companies in the world to seek a bailout from the US government, the analysis that was used to evaluate the decision (including what the alternatives were and whether a rescue would even work), the steps that were taken to rescue and restructure General Motors and Chrysler, and the performance of the US auto industry since the bailout. We close with general lessons to be learned from the episode.

A new data set facilitates study of learning spillovers in World War II shipbuilding. Our results contain two principal but contrasting themes. First, learning spillovers were a significant source of productivity growth, and may have contributed more than conventional learning effects. Second, the size of the learning externalities across yards, as measured by Spence's θ, were small. These findings, which are not mutually inconsistent, suggest an optimistic view of learning spillovers: they are a significant source of productivity growth, but the market failures induced by learning externalities may be modest. (JEL D24, N72, O3)

This paper discusses some conditions under which the Cohesion Policy of the European Union can effectively contribute to enhance R&I in Europe and the extent to which it offers a relevant framework for devising Research & Innovation policies at regional level overcoming possible tensions and maximising potentials for synergy. To do so, the paper mainly relies on an in-depth illustrative case study of an Italian Southern region, Apulia. The paper describes the regional innovation system put in place by the Apulia Region and analyses the value added that can be attributed to such a system as far as innovation and economic development promotion are concerned; on this basis, findings from the case study are generalised in a set of lessons learned with hopefully more general relevance: these are discussed in Section 4.

Our analysis explores how a key managerial competence, the supplier relations dynamic capability, was progressively developed and implemented by Renault over a quarter of a century. As our historical approach will demonstrate, this construction process followed three main periods, each of which was characterized by specific external and internal circumstances that constitute turning points and triggers in the organization's transformation decision process. Most importantly, we will argue that this case brings to light that three phases are necessary for the supplier relations dynamic capability to fully develop: hybridization, combination and saturation, which open new perspectives on the construction process of dynamic capabilities in general.

We investigate whether the first digit of an odometer reading is more salient to consumers than subsequent digits. We find that retail transaction prices and volumes of used vehicles drop discontinuously at 10,000-mile odometer thresholds, echoing effects found in the wholesale market by Lacetera, Pope and Sydnor (2012). Our results reveal that retail consumers devote limited attention to evaluating vehicle mileage, and that this drives effects in the wholesale market. We estimate the inattention parameter implied by the price discontinuities. In addition, our results suggest that estimating consumer-level structural parameters using data from an intermediate market can give misleading results.

We quantify the effects of the Swedish GCR, a program to reduce oil dependence and greenhouse gas emissions in the automobile industry. We find the GCR to increase the market shares of `green cars' and its cost to be $109/tonCO2 saved, thus 5 times the price of an emission permit. Since the main green cars in Sweden are FFVs (flexible-fuel vehicles), which can switch between petrol (gasoline) and ethanol, we also account for fuel choice, which increases the cost of the program. Finally, we show that consumers would have purchased FFVs regardless of the rebate provided by the GCR.

Making use of an original dataset we empirically investigate the determinants of state aid to the car industry in the European Union. The EU regulatory system on state aids and the long history of governments' grants to this industry make this an interesting case study. Our findings show that in the period 1992-2008 -controlling for a number of variables - subsidies to the car sector have shown a decreasing trend, mainly because of the reduction in the aid aimed at increasing the productive capacity of firms. We find a pattern of a dynamic strategic game among EU countries, whereby aiding a firm induces other member states to grant more subsidies; this seems to be mainly driven by rescue and resctruring aid. Overall, economic and political variables (industry's value added, country's income per capita, election year, government's political orientation) are found to significantly affect aid to the car industry.

During the recent period of economic crisis, many countries have introduced scrappage schemes to boost the sale and production of vehicles, particularly of vehicles designed to pollute less. In this paper, the authors analyze the impact of a particular scheme in Spain (Plan2000E) on vehicle prices and sales figures as well as on the reduction of polluting emissions from vehicles on the road. They considered the introduction of this scheme an exogenous policy change and because they could distinguish a control group (both non-subsidized vehicles and the same vehicles in Slovenia) and a treatment group (subsidized vehicles), before and after the introduction of the Plan, the authors were able to carry out their analysis as a quasi-natural experiment. The study reveals that manufacturers increased vehicle prices by 600 on average. In terms of sales, econometric estimations revealed that the Plan would not cause any increase in sales. With regard to environmental efficiency, comparing the costs (invested quantity of money) and the benefits of the program (reductions in polluting emissions and additional fiscal revenues) and it has been found that the Plan would only be beneficial if it boosted demand by at least 30%. (C) 2016 Elsevier Ltd. All rights reserved.

Bathelt H., Munro A. K. and Spigel B. Challenges of transformation: innovation, re-bundling and traditional manufacturing in Canada's Technology Triangle, Regional Studies. This paper develops a perspective of regional re-bundling in overcoming economic crises. It does this by focusing on the effects of the recent global financial crisis on traditional manufacturing. It analyses the structure of innovation processes and their development over time in Canada's Technology Triangle – a region known for university-related spin-off processes and successful modernization. What is less well known is that this region has been strongly influenced by traditional manufacturing industries. It is shown that these industries have been well prepared to deal with the effects of the crisis due to ongoing innovation and diversification stimulated by prior economic crises. Bathelt H., Munro A. K. and Spigel B. 转型的挑战：创新、再绑定以及加拿大技术三角中的传统制造业， 区域研究。本文提出了区域绑定视角来应对经济危机。文章通过集中于目前传统制造业全球金融危机效应，对此问题进行了考察。文章分析了创新过程的结构以及加拿大技术三角的发展。人们普...

This paper illustrates the upgrading experiences of the automotive and hard disk drive (HDD) industries in Thailand, chosen because of their outstanding export performance in the developing world. An understanding of their upgrading experiences can shed some light on the ongoing debate regarding the relative importance of international production networks (IPNs) and industrial clusters (ICs) and their implications for prudential industrial policy. The impact of the recent global recession is also discussed in this paper. There is evidence of industrial upgrading in both the automotive and HDD industries. Yet one primary policy challenge still remains, that is, the limited role of indigenous suppliers in the multinational enterprise (MNE) production networks. This limited role is, to a certain extent, related to the overall incentive structure. Where these two industries differ is in their mode of networking, that is, whether they are part of an IPN or an IC. In the case of the automotive industry, industrial clustering has been observed and has reached a level where the local content of a locally manufactured vehicle is approaching 100%. In the case of the HDD industry, industrial clustering has naturally occurred and reached a certain level. Even though the current global economic crisis has severely affected each industry’s production and exports, the “hollow out†scenario is unlikely to apply to either. In other words, Thailand should remain a base of production and exports for MNEs, a situation which points to the need for continual industrial upgrading. Three policy-related conclusions are drawn in this paper. Firstly, the limited linkages between MNE affiliates and indigenous suppliers point to the need for a comprehensive study probing the potentially distorting effect of the cascading tariff structure—a key theme of tariff policy for the past three decades. Despite consecutive governments’ efforts since the mid-1990s to neutralize the tariff structure, it is clear that much remains to be done. Secondly, the choice between an IPN and an IC is a purely private sector decision, driven by the nature of the particular industry. There is also the possibility of coexistence between IPNs and ICs. Industrial clustering can be a developmental outcome rather than a pre-condition of technological upgrading. Finally, to promote industrial upgrading process, the government should emphasize policies that strengthen the supply-side capabilities of local firms and create an investment climate that encourages further upgrading activities.

Casual empiricism suggests higher quality is associated with greater variety. However, recent theoretical and empirical research has either not considered this link, or has been unable to establish unambiguous predictions about the relationship between quality and variety. In this paper we develop a simple model, which predicts that for low qualities variety should be positively correlated with quality and we establish conditions under which variety will either increase or decrease with quality at higher quality levels. The monopolist uses variety to increase the profitability of price discrimination across product lines of different qualities, by increasing the likelihood consumers choose high price products among products yielding the same utility. We show that the number of varieties offered by the monopolist is greater than the social optimum. The predictions of the model are supported by an analysis of the market for cars. A wide range of car manufacturers are found to offer a hump-shaped distribution of varieties.

This paper considers the trade-off between leveraging external sources of innovation by outsourcing design and engineering activities and the ability to develop internal product development competences. The trade-off arises because the division of labor within and across firms' boundaries has a crucial role in shaping competence development processes, especially because the division of labor also influences opportunities for learning by doing. In new product development projects, learning by doing appears to be both a key determinant of competence development and a difficult-to-substitute form of learning. While the division of development tasks is often considered as guided by product architecture, we show that by decoupling the decisions concerning the product architecture and the allocation of development tasks, firms can realize the benefits of outsourcing such tasks while developing new internal competences. Drawing on a longitudinal case study in the automotive industry, we also identify a new organizational lever for shaping competence development paths and for designing firm boundaries. This lever consists in alternating different task allocation schemes over time for different types of development projects. We show why this is a novel solution, what its underlying logic is, and how it enables alleviating the trade-off between the benefits of leveraging external sources of innovation and the opportunities for competence development provided by in-house design and engineering. We discuss implications for theories of organizational boundary design and innovation management.

This paper empirically tackles a behavioral aspect of consumer choices as a determinant of demand in the German automobile industry. Our primary goal is to refine the existing literature on demand estimation by exploring the impact of uniqueness seeking behavior of individuals. Using a dataset on the segment of compact cars in the German market, we show that consumers have an intrinsic need for uniqueness seeking, and the degree a product satisfies this need can be considered as an additional product characteristic. Finally, we can derive implication for firms’ differentiation strategies.

Following the increasing competitive pressure and the emergence of new industrial poles within the auto industry, Italian firms have been the protagonists of an intense reorganisation, which is still ongoing. This case-study involves 13 supplier firms, operating in the automotive industry, localised in Turin, that have adopted a series of strategies aimed at improving their international competitiveness. The empirical findings show that there is a particularly strong innovative drive for the interviewed firms to position themselves in activities with greater added value and to undertake internationalisation strategies, from the 'lighter' to the more 'complex' forms, coupled with a use of information and communication technologies epresents a case of excellence.

This aim of this paper is to study the characteristics of the internationalisation process and to identify its determinants in a representative sample of firms in the Italian automotive chain. The main findings of an econometric analysis based on micro-evidence are that: a) the firms engage in complex modes of internationalisation; b) the individual firm’s characteristics play a significant role; c) the firms located in the province of Turin have a clear localisation advantage, a sort of an“industrial district” effect.

This paper contains an independent3 empirical analysis of the effect of a Notice, issued by the Swiss Competition Commission in 2002 concerning vertical agreements between manufacturers and distributors ofmotor vehicles, on the degree to which the subsequent prices of cars in Switzerland exceeded those charged on the same models in neighbouring countries. Evidence presented here implies a non-transitory reduction in the degree of price discrimination against Swiss customers of medium- and large-sized cars in the years after the Notice came into effect.The total gain to Swiss buyers of cars is very conservatively estimated to be six times the total cumulative budget of the Swiss Competition Commission during the years 2003-2006; the best estimate of those gains exceed a quarter of a billion Swiss Francs during the same period. By 2006 the cumulative price reduction of the Swiss Competition Commission's action resulted in average savings permedium- and large-sized car that are estimated to be 929 and 2113 Swiss Francs, respectively.Moreover, the recurring annual gain to Swiss consumers of this single action by the Swiss Competition Commission is conservatively estimated to exceed ten times the latter's current annual budget, providing some indication of the "value for money" that effective competition law can have, even in economies with ostensibly open borders.

This paper studies the introduction of new products (increase in product variety) in the automobile industry. The focus is on the two sources of market power that may allow the firms to get higher profits (and, thus, recoup investments): new products and brand-name reputation. The effects of new products on the private incentives to innovate are investigated on the basis of the dataset for the German car industry for 2003. The dataset is rather unique in the sense that it contains detailed information on the technical characteristics of cars, prices and sales as well as information on the introduction of new car models (including new variants and versions) into the German car market at a very disaggregate level. It has been found that both a new model and brand-name reputation may allow the innovative firms to get some market power and recoup their investments. Competition is, however, not localized within a market segment and the class of new or old models, i.e., products from different market segments, new and old products compete with each other (coexisting and not eliminating each other) and do not constitute separate market niches. On the other hand, new (old) models are perceived to be closer substitutes than old (new) models. Consumer preferences towards brand and new products vary depending on their age.

This paper aims to carry out an analysis of fuzzy clusters in the Brazilian automotive industry to contribute to the analysis of the relative importance of these economic activities in the national productive structure and in their regional contexts. The intention is to assess whether, once they have been established in the structure of a determined region, the economic activities of the industry establish productive relationships similar to other industries to the point of leading an industrial group in the regions or in the national economy.

The paper first discusses alternative theoretical frameworks to analyse the impacts of FDI on host economies. Second, it provides an overview of major developments in the Hungarian automotive industry since the early 1990s, discussing both firm strategies and the macro level factors influencing the former ones, especially by highlighting the consequences of Hungary’s accession to the EU. A tentative taxonomy has also been developed, and applied when discussing the prospects for Hungarian suppliers. The paper concludes that diffusion models and the notion of sectoral system of innovation and production offer a more appropriate conceptual framework to capture the actual socio-economic impacts of FDI in this sector than the generally used spillover models. Notwithstanding the huge importance of globalisation, various elements and dynamics of national innovation systems still do matter. As for a major element of an NIS, namely government policies, it is more fruitful to create an attractive, favourable environment for R&D and innovation than focusing on the promotion of industry-specific R&D and innovation activities. It is also of crucial importance to co-ordinate several policies to enhance competitiveness.

This paper focuses on the diversity of engine technologies for low emission vehicles (LEVs) that are developed by car manufacturers in order to substitute for the conventional internal combustion engine vehicle (ICEV). Our purpose is to analyse the competition between the various technologies for LEVs as well as the innovative strategy of car manufacturers. We first propose to define and to represent these technological trajectories in order to compare their performances and to identify their strengths and weaknesses. The technological bottlenecks, the barriers to the adoption of these alternative engine technologies as well as the features of this technological competition are underlined. We then use a patent data analysis to study the patent portfolios of the main car manufacturers in these technologies over the period [1990–2005]. The dynamics of patent applications by car manufacturers gives insight on the competition among technologies and on the strategy of firms. This analysis emphasises the progressive diversification of firms' patent portfolios over the whole set of engine technologies and the differentiated strategic positioning of car manufacturers according to countries.

This article illustrates how contracts are completed ex post in practice and, in so doing, indirectly suggests what the real function of contracts may be. Our evidence comes from the contracts between automobile manufacturers and their dealers in 23 dealership networks in Spain. Franchising dominates automobile distribution because of the need to decentralize pricing and control of service decisions. It motivates local managers to undertake these activities at minimum cost for the manufacturer. However, it creates incentive conflicts, both between manufacturers and dealers and among dealers themselves, concerning the level of sales and service provided. It also holds potential for expropriation of specific investments. Contracts deal with these conflicts by restricting dealers’ decision rights and granting manufacturers extensive completion, monitoring and enforcement powers. The main mechanism that may prevent abuse of these powers is the manufacturers’ reputational capital.

This Paper studies the criteria with which the presence or absence of ‘subsidy’ in sales contingent Launch Aid R&D support may be determined when payoff-relevant market incompleteness limits the precision of market-based pricing to non-trivial intervals. The criteria currently employed in WTO and EU proceedings are consistent with correct accounting for the opportunity cost of capital when markets are complete and frictionless, but fail in the presence of payoff-relevant market incompleteness where the interval between bid and ask prices may not be finessed away. An economic definition of subsidy must necessarily capture opportunity cost, and we develop a definition that fully incorporates government’s opportunity cost in both complete and incomplete market settings. With this in hand we then revisit some commonly posed questions concerning the subsidy status of Launch Aid, giving indication of how they may be best resolved by those in possession of the relevant details.

The Spanish automobile industry had a late start. Although the country proved capable of short production runs of high-quality vehicles during the first third of the century it never managed to build up its own industry, unlike Great Britain, France, or Italy. What then, were the critical shortcomings that prevented the establishment of large Spanish motor manufacturers? Put another way, why did all of the companies set up during the first half-century fail to survive? This paper attempts to shed some light on these questions, employing a wide-ranging analysis of both internal and external factors affecting the industry. A feeble internal market, lack of resources and production factors are usually adduced as reasons, as are Spain's general economic backwardness and the role played by the public authorities. However, this paper mainly focuses on the internal factors concerning company strategy and organisation. A comparison with the Italian case helps put the traditional arguments in proper perspective and highlights those covering business strategies. Finally, we argue that a broad range of factors needs to be analysed to fully understand why Spain failed to establish a motor industry.

The decade of the 1940s was one of the darkest periods in the country’s history, with years of famine, repression, general misery, and impoverishment of all aspects of national life ranging from culture to the economy. During those years plans were made to establish a Spanish motor industry once the Civil War had come to an end in 1939. It seemed a propitious moment for private enterprise and various foreign motor companies presented proposals for manufacturing their entire vehicle range, from cars to trucks. However, the government plans were for a State monopoly, a policy which meant that any private projects which did not contemplate the regime taking management decisions were rejected out of hand. From 1941 onwards, any new initiative was required to meet the plans set by INI. The main argument running through this paper is that one can only understand the development of the modern Spanish motor industry if one grasps the haggling between motor companies and government regarding market entry and the impact of the regime’s autarchic policies in the 1940s.

Before the Civil War (1936-1939), Spain had seen the emergence of firms of complex organizational forms. However, the conflict and the postwar years changed this pattern. The argument put forward in this paper is based on historical experience, the efforts will be addressed to explain the development of Spanish entrepreneurship during the second half of the twentieth century. To illustrate the change in entrepreneurship and organizational patterns among the Spanish firms during the Francoist regime we will turn to the case of the motor vehicle industry.

I construct a dynamic model of transactions in used capital to understand the role of leasing when trading is subject to frictions. Firms trade assets to adjust their productive capacity in response to shocks to profitability. Transaction costs hinder the efficiency of the allocation of capital, and lessors act as trading intermediaries who reduce trading frictions. The model predicts that leased assets trade more frequently and produce more output than owned assets, for two reasons. First, high-volatility firms are more likely to lease than low-volatility firms, since they expect to adjust their capacity more frequently. Second, ownership's larger transaction costs widen owners' inaction bands relative to lessees'. Using data on commercial aircraft, I find that leased aircraft have holding durations 38-percent shorter and fly 6.5-percent more hours than owned aircraft. Additional tests indicate that most of these differential patterns in trading and utilization arise because owners have wider inaction bands than lessees, and carriers' self-selection into leasing plays a minor role.

The paper analyses the new geography of the European automotive area associated with the enlargement of the European Union and the structural changes occurring in the automobile industry's productive organisation. The new geographic configuration is a double extension (enlargement) and intensification (through the spatial agglomeration of activities) movement. The first part of the paper discusses the enlargement towards new areas with the development of the automotive activities in Central and Eastern European countries, its impact on the Spanish and Portuguese automobile industries and on the core regions. The second part analyses the double trend which affects the location of automobile production activities in Europe: on one side, specialisation, reflecting automotive firms' desire to benefit from the opportunities offered by the markets' greater openness and by enlargement towards new zones; on the other side, the spatial agglomeration of activities (clustering).

The relationship between work organisation and technological practices in the auto industry is analysed in this article. The concept of ‘technological practice’ in this sector is used to describe the specific ways of embedding information and communication technology applications into the organisational forms and cultural patterns. This concept was developed as a theoretical and methodological approach within the Sowing project (TSER, DG XII), which included, as components of that practice, shop floor cooperation up to the regionally based networks of companies and supporting institutions. The authors studied different sectors in the automotive firms of different European countries (Germany, Belgium and Portugal): shopfloor and production lines, design and management and the local inter-relationships. The focus was on finding out, if, within the same sector (and the same product industry) the same technological practice existed, although the cases were found in several European countries. In the following article some evidence of the different alternatives in terms of technological practices for the same sector is presented. Much of the literature tries to disseminate an idea of a single (and optimum) organisational model for the same type of product. And here, even with the same type of technology, and product (medium-high range), one can find different models, cultures and ways of organising the industrial structure (firms, regional institutions, R&D centres) in the auto industry. publishersversion published